Among the many things that land reform in South Africa suffers from is the lack of scientific attention paid to the willingness of commercial producers to exit or contract. This research aims to contribute to literature on this phenomenon.
The interplay between the business confidence and the opportunity costs of a farming enterprise represented in a survey sample of 450 commercial farm owners is investigated, paying special attention to owners who want to, but cannot exit.
The regression analysis suggests that both forces have a strong influence on structural change, as they depict the rather complex interplay between the two main factors that may keep farms in business, one of which is a positive business climate and the other the capital invested. A subsequent cluster analysis indicates that there is a major cluster of producers who are pessimistic about the prospects of their farming business, but who are unable or unwilling to leave their farms.
A limitation of our study is the fairly small sample size (91 exiters in the sample), so caution is advised in generalising the results. Another limitation is the overrepresentation of the Western Cape.
It is likely that the productivity of South African agriculture could improve if some of these producers caught in the “system” could leave farming to create new opportunities for entrepreneurial entrants.
The importance of a captured state has been neglected both in theoretical frameworks and in practical concepts of commercial agriculture in South Africa.
